GMR HYDERABAD AIRPORT PLANNING TO RAISE BETWEEN $350m AND $400m BY SELLING BONDS

GMR HYDERABAD AIRPORT PLANNING TO RAISE BETWEEN $350m AND $400m BY SELLING BONDS

GMR Hyderabad International Airport, a subsidiary of GMR Infrastructure, is planning to raise between $350 million and $400 million by selling bonds to overseas investors as it seeks to raise funds for expansion of its passenger capacity handling by tapping a relatively benign interest rate environment abroad, three people familiar with the company’s plans said.

Six banks, led by HSBC, JP Morgan and Bank of America-Merrill Lynch, and including Citibank, Axis Bank and Yes Bank, have begun canvassing investors starting from Hong Kong on Wednesday. This will be followed by meetings in Singapore, London and New York next week. The issue will be a 144A bond and will be open to investors in the US giving it a wider investor base.

“The roadshows have started and it is likely that this bond issue may hit the global markets as early as next week depending on investor interest. The company wants to raise funds for expansion it has planned in the airport,” said one of the persons.

A GMR spokesperson said: “We do not comment on speculative news.”

Rating agencies Fitch and Moody’s have rated the proposed issue at BB+ and Ba1 respectively. Both have maintained a negative outlook on the issue. “The negative outlook reflects the elevated rating case forecast net debt to earnings before interest, tax, depreciation and amortisation, averaging 5.1 times. Fitch believes that the higher capex driving this increased leverage forecast is justified by the strong traffic growth and will be more efficient than the previous more conservative phased capex plan,” the rating agency said.

GMR has plans to expand the passenger handling capacity to 50 million passengers per annum (MPPA) from the current 25 million with the construction of the second terminal and a third runway.

Plans include the expansion of cargo terminals, warehouses and additional rapid exit taxiways. The expansion is expected in two phases –––the first to have 40 million by 2022 and to 50 million by 2028.

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